Personal Loan: Need or Want?

Banks advertise their personal loan services by tapping people's wants before the needs. It’s a universally accepted practice and legal marketing strategy at that. The tactic is used aggressively by urging consumers with occasional misleading words and picturesque benefits of having instant money from banks and other lending institutions. Loan sharks, for instance, are infamous for taking advantage of this weak spot of those who are in need – and wanting!

How many people do yearn for a dream house, a well-deserved grand vacation in the most-talked about tourist spot or a flashy car? Banks know very well what people like and what risks people are willing to take to attain what they like the most. That is the foundation of their marketing tactics to get clients and earn more from the loan interests.

Enticing marketing strategies make it hard for should-be borrowers to avoid getting into debt regardless the necessity. Fighting the urge to fall to the alluring terms of banks and lending companies is proven hard as evident in the booming domestic lending sector worldwide. But before you discombobulate on whether to apply for a personal loan or not, ask yourself first – Is personal loan really what you need? Aren’t there other options? Do you classify personal loan a want or need?

People tend to be very subjective when it comes to decision making involving money. That is the reason why banks vie for the most hassle-free loan processing services to lure in more customers and emulate the feeling of being treated like a royalty. In reality, many people avail personal loans out of whim and not primarily on the basis of need (or want). Before they know it, they are already wading in a quagmire of bank notices.

Separating wants from needs.

Many financial coaches and personal financial managers teach ways to literally compute the pros and cons of owing lenders. There are the complicated terms vis-à-vis amortization interest rates that can render confusion more than clarification. Debts are complicated issues to begin with, so why add more stress to your already agitated mind?

Classifying your purpose for a personal loan into needs and wants will do the magic. The rule is not to pursue borrowing if it is only for a want and use the calculator if it is for a need. The best way to manage your finances is to save for whatever luxury you want and spend only for what you need.

Do you really know if your personal loan is for a need or want? If not, better drop the idea and start earning and saving for luxuries instead.

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James Henry Abrina is an editor, writer, SEO specialist and currently a Corporate Communication Professional, Market Desk Strategist, Business Development Officer and Unit Head for Business Profiles Incorporated.

He currently specializes in security management and business intelligence. Together with the company, he advocates Business Continuity Planning to change how the Philippine business sector sees the definition of crisis response and management.

For more useful information, read his articles at Triond and Masscom Tutor. Or his EzineArticles page.